CAPITALISM (4/3/05)

Even though we live in what most would agree is a capitalist nation, there seems to be much confusion as to what capitalism is. To a degree, that is understandable. Part of the function of capitalist economic theory is to obscure the power relationships and social organizational dynamics behind a facade of self-serving ideology. The essence of capitalism is the control of society by the economic elites. Money (capital) rules.

Giant corporations and the super-rich constitute an oligarchy which exercises effective social control both through their domination of economic decision making and through their indirect control of our totally corrupt political system. It is this unwholesome concentration of economic power which is the essence of capitalist control. Talk about ownership of the means of production is an archaic misrepresentation of reality. It’s the money.

In discussing social organizational reality, we must at all times be aware of the social dynamics of power. When the Bolsheviks seized power in Russia, did they usher in a worker’s paradise? Of course not. They consolidated their power and ruled through centralized bureaucratic control, justified by ideological misrepresentations of reality (dictatorship of the proletariat, etc). The main point is that the concentration of power in any form is the key problem to be dealt with in trying to transform any society from the way it is to be more like the way it ought to be. In our society, money is the key. It is pointless to advocate replacing a Fat Cat with a Fat Bureaucrat, and cooperatives have only limited application. We need to clear our minds of ideological baggage in order to understand and deal with the consequences of organizational hierarchy.

One of the critical features of capitalism is the use of market control mechanisms to achieve efficient social control. The giant corporations have created a system whereby the average person needs to accommodate himself to powerful corporate controlled market forces in order to survive. The market has expanded to the point where virtually every adult must work for wages to obtain the money to buy the essentials of life. There is nothing wrong with working for wages, however, the nature of our economy is that most are forced to take whatever employment they can get. The corporations and the rich decide whether there will be a demand for teachers or a demand for munitions workers. The decisions which profoundly effect our economic well-being and quality of life are made in corporate boardrooms and most of us have no say and little choice but to go along.

The control of the flow of money is a remarkably efficient means of social control. Most people respond to monetary inducement so unthinkingly that the social control aspects of monetary power go unnoticed. The attention usually falls on governmental actions (strongly influenced by the economic elites) while our corporate rulers wheel and deal in the shadows, the true nature of our political economy largely unexamined and misunderstood.

What to do? In theory, the transition from a corporate-capitalist controlled society to a more wholesome, balanced and more or less democratic society is fairly straight-forward (implementation is another story). The two keys are 1) governmental control of the financial system and 2) breaking up concentrated economic power. In regards to the second item, it should be noted that we have been relentlessly moving in the opposite direction for at least the last fifty years. The ongoing reduction in taxation on the corporations and super-rich have concentrated economic power as never before. The net effect has been the creation of a transnational corporate oligarchy controlled by the wealthy elite.

The way to break up concentrated economic power is through taxation. We need realistically progressive taxation on income and accumulated wealth for individuals and organizations (dealing with non-profit organizations may be difficult). The intent is to drastically reduce the concentration of economic power under elite control. In the case of corporations, it would tend to make massive size uneconomic, hence, to shrink the size of the big corporations and spread the wealth around. Many more smaller businesses competing is better than a few large businesses dominating. Oligarchy requires sufficiently small numbers to permit efficient coordination and control.

This is not a return to the past where many small capitalists vigorously engaged in cutthroat competition. That would be a disaster. Rather, it is a means to wrest the political system from the control of concentrated corporate and financial power. In any advanced industrial economy, the government plays an active role, however, now it would be open and above board and subject to at least some democratic decision making. It would not be difficult to take appropriate measures to ameliorate any adverse consequences to increased local business competition. This would be far preferable to the current race to the bottom caused by corporate globalization. When businessmen rule, society suffers.

In addition to dis-empowering the monster corporations and super-rich through taxes, we need to empower the people through income redistribution and entitlements. Poor people need more money to spend and we all need universal health care. The minimum wage needs to be significantly increased. Higher education should be free and widely available. The social safety net needs to be expanded and strengthened, not destroyed. In short, an economic bill of rights to give meaning to life, liberty and the pursuit of happiness.

As for control of the financial system, there is simply no way that private control of the fundamental driving force of social control (money) is going to facilitate socially desirable, sustainable development. For starters, banks in competition with other banks need to offer attractive rates of return to depositors which requires attractive rates of return on loans. This, in turn, requires investing in market friendly activities which reinforce market domination and control, and also in the more lucrative socially dysfunctional types of business: oil exploration, big dams, roads, airports, luxury hotels, shopping malls, financial speculation, money laundering, etc. Allowing private control of the economy for private gain is insane. Private business is fine, but overall control of the political economy must be in the public domain through the political system.

In order to implement these or any other socially beneficial changes it will be necessary to break free from the tyranny of global capital. All of the financial and trade agreements are designed to facilitate global economic domination and control by the economic elites. This unrestricted private financial intrusion into local economies renders popular democratic economic reform impossible. The cross-border flow of money needs to be severely restricted and controlled.

Also, international trade, far from being the key to universal prosperity, is another means of economic domination and social control. In the international market, as everywhere else, the economically powerful dominate the economically weak. International market interdependencies ensnare the Third World in a web of First World financial and corporate control. Control, I might add, that is backed by US military power, ready to punish weak and defenseless nations that resist playing by our rules. Additionally, the global trade in goods requires massive use of fossil fuels and is inherently anti-environmental. To the greatest degree possible, international trade should be discouraged and local autonomy encouraged.

A final point needs to be emphasized. In any society, the political system needs to be the overarching system of coordination and control. In our society, the economic system has totally overwhelmed the political system with disastrous consequences. That needs to be corrected. However, it is essential to keep in mind that the government and the political system are not synonymous. Even as we use the political system to gain control of the economic system through financial control, taxation and economic rights, we need to guard against giving governmental officials too much discretionary power. We need a political system which safeguards against all forms of concentrated power.

In conclusion, the essence of capitalism is the rule of money. The nature of capitalism is that the social impacts of money making activities are ignored as capitalists engage in a kind of economic warfare (competition) to increase their power (money). The tendency is for economic power to become ever more concentrated, and for oligarchic social control in which the elites intentionally dis-empower the citizenry economically and politically in order to consolidate and protect their power and privilege. The consequence is a highly dysfunctional society with a strong emphasis on the exploitation of human weakness for gain. For the majority this means a lack of development of their human potential and the degrading of their quality of life. The system seems to gravitate towards a form of National Security State (fascism), and serious social and environmental problems are not dealt with because the solutions would impinge upon elite power. Our long term goal should be the transformation of society away from the oligarchic rule of capital into a more balanced society of citizen empowerment and corporate/elite dis-empowerment that emphasizes the sustainable development of human potential rather than the unsustainable exploitation of human weakness.

Seattle Keith 4/3/05 saskckforseattle@msn.com